Frontier report estimates the potential value for money of early education

The Department for Education (DfE) today published a report commissioned from Frontier Economics presenting new evidence on the potential value for money of early education. This report is part of the Study of Early Education and Development (SEED) being undertaken by a consortium of NatCen Social Research, 4Children, Oxford University and Frontier.

The analysis calculates the size of impacts that different types of provision (e.g. part-time and full-time, private and school providers, by quality of provision) would need to have in order for the financial value of the benefits to match the costs of delivery. Actual impacts in excess of these breakeven points would indicate positive value for money. The breakeven points are estimated by combining cost data with estimates of the monetary value of impacts derived from existing evidence and from new analysis of the National Pupil Database. Estimates of actual value for money will be presented in later analysis from SEED when the impacts have been estimated.

The key findings from this analysis are:

Later monetary benefits come from reduced Special Educational Needs (SEN), truancy, school exclusion, crime, smoking and depressions and from improved employment rates and earnings.

The bulk of the monetary value of the returns is higher earnings rather than reductions in the costs of Government services and around two thirds of the benefits accrue to individuals rather than the Government.

A “medium” sized impact on cognitive and social development measured at ages three and four in SEED are estimated to each have a monetary value of around £4,000, while a comparable sized impact on Key Stage 1 attainment at age seven is estimated to have a monetary value of around £30,000. The breakeven impacts are consequently estimated to be “small” to “medium” for the development outcomes at age three and four, and to be “very small” to “small” for the KS1 score at age seven.

Differences in the breakeven impacts across different types of provision are directly proportional to the differences in cost. Costs of full-time provision (1560 hours each year) are 2.7 times greater than those for part-time education (570 hours each year). Hence, full-time early education will need to have considerably larger impacts than part-time early education to offer better value for money. However, differences in cost are much smaller across different types of providers and quality of provision which means that the higher cost options would not require substantially greater impacts to offer better value for money.

Frontier regularly advises clients in the public sector on issues related to early education and childcare policy.